Banks lead Tokyo rally in bargain hunt

AFTER the rout, it was time for a rebound. Japanese equities, undermined last week by profit-taking and currency jitters, found a firmer tone on Monday.

Brokers said that investors looking to cash out had got the selling out of their system - for now at least - and that had cleared the way for bargain-hunters.

The benchmark Nikkei 225, coming off a drop of more than 6% last week, rose 118.42 points to 10,454.12.

Market strategists from several investment houses had been warning for some time that Tokyo was ripe for a hefty consolidation. Traders noted that concerns about the feisty yen - and its flipside, a swooning dollar - remained real.

The biggest gainers were the stocks that had received the worst of the flak. Mizuho Financial, the world's largest bank by assets, bounced back in some style, adding 9000 yen, or 3.5%, to 267,000 .

Other lenders were also on the gainers' board. Sumitomo Mitsui Financial gained 13,000 yen or 2.4% to 564,000 yen, while UFJ firmed a more-modest 4000 yen, or 0.9%, to 459,000.

Softbank, the net services group and another stock that was sent reeling last week, soared 410 yen, or 7.8%, to 5620.

There were also advances for leading exporters as some investors staked out fresh positions on hopes for a sustained rebound. Car maker Honda Motor rose 80 yen, or 1.9%, to 4370 yen, consumer electronics giant Sony was better by 60 yen, or 1.6%, at 3840, and Matsushita Electric Industrial, owner of the Panasonic brand, traded at 1345 yen, 23 yen or 1.7% higher.

Brokers said the market may have drawn additional cheer from an Upper House by-election win for the ruling Liberal Democratic Party, announced at the weekend.

The country is in election mode at present, with a national poll set for 9 November. Investors are waiting to see if LDP head Junichiro Koizumi, the country's Prime Minister, secures a fresh mandate, allowing him to press on with efforts to drag the economy further out of its decade-long funk.

Hong Kong shares failed to make much headway, with gains still capped by a note of caution injected recently by Morgan Stanley. The investment bank turned its market recommendation - and that for Singapore - on its head, moving to underweight from overweight, arguing the recent, impressive rise had run its course.

The Hang Seng index was up just 44.94 points, or 0.4%, at 11,781.31, aided by a 50 cents, or 0.5%, gain to HK$111 for heavyweight lender HSBC.

Some of the most virile stocks of late, however, continued to edge lower.

Hutchison Whampoa, the conglomerate headed by billionaire Li Ka-shing, lost 25 cents or 0.4% to HK$58.50, flag carrier Cathay Pacific Airways dipped 15 cents, or 1%, to HK$13.55, and Henderson Land Development gave up 50 cents, or 1.6%, to HK$31.70.

China Telecom gained 10 cents, or 4.3%, to HK$2.45 as investors applauded its plans to purchase half a dozen local networks from its mainland parent.

Technology stocks lent Taiwan's market some spine ahead of a key results. Chipmaker and sector bellwether Taiwan Semiconductor Manufacturing, which turns in quarterly figures on Tuesday, gained T$1.50, or 2.3%, to T$66.

The Weighted index rose 43.76 points, or 0.7%, to 5961.9, gaining ground for the first time in five sessions.